Frequently Asked Questions (FAQ)
1. Why is Cash Management Important?
Answer:
Cash management plays a crucial role in managing the finances of businesses or individuals. This process involves accumulating, managing and disbursement of cash to make liquidity in the business and boost profitability.
2. What are the key components of cash management?
Answer:
The Key components of cash management include accumulation, disbursement, forecasting, budgeting, and investment of cash.
3. What is a cash flow statement?
Answer:
A cash flow statement is a financial statement that shows the total cash flow of the company. It also represents the operating cost of the business.
4. What are the risks of poor cash management?
Answer:
Poor cash management can lead to insolvency, missed business opportunities, increased borrowing costs, and damage to the company’s credit rating.